Tuesday, 30 April 2013

Margaret
Thatcher, said former trade minister David (Lord) Young, reversed a sixty year decline in the British economy. She bequeathed a “generation of growth” gushed
the Confederation of British Industry. She “breathed life into free
enterprise,” evinced the former boss of British Petroleum.

But for
her, Britain, culturally and
economically, would resemble Bucharest
circa 1978, minus the exciting nightlife.

So goes the
official interpretation of Margaret Thatcher. But reality, says the Left,
paints a profoundly different picture. Economic growth was actually no better
in the 1980s than the benighted 1970s – both record an unremarkable average of
2.2%.

Between
1990 and 2009, after Margaret Thatcher was deposed, but when her economic tenets
were unquestionable, Britain had a growth rate of 1.7%. And that is obviously before the current stagnation.

Far from
releasing the forces of enterprise, Margaret Thatcher released the forces of
inertia.

Zzzzz

It might
seem, on the surface, that this battle of GDP figures is about as fascinating as
algebra. But it has significant implications. For if, say the Keynesians, the
economic boasts of conservatives are hollow, then a kind of ‘Back to the
Future’ logic is validated. The post-war era, with its strong trade unions, state
ownership, much greater equality and regulation, suddenly appears, not only more appealing socially,
but more economically persuasive as well.

But there
is a fly in the Keynesian soup. Scroll down one Red Pepper Thatcher article and
you’ll find a comment by “Geroge”,
an unabashed (and hurried) fan of the blessed Margaret. But he makes an
interesting point. You would expect, he says, growth figures in the 1950s,
coming just after the huge destruction of World War Two, to be high. Emergent
war economies have high growth. Thatcher’s performance three decades later,
although comparatively rather shoddy, was not half bad in the circumstances.

All of Europe experienced an economic boom in the post-war
decades. It was in the post-war years, writes Thomas Frank in Pity the Billionaire,that France,
Italy, Belgium and Sweden, “embarked on their greatest
boom periods in modern times”. You could add West
Germany, Spain,
Austria and, to some extent,
Britain,
to that list. This, despite frequent corruption and political favouritism;
malaises the Right now dubs “crony capitalism”. These apparent impediments to
growth made no discernable difference.

Outside
Europe, the US,
though physically virtually untouched by war, received a massive economic shot
in the arm by other countries’ need to recover.

If that
boom period was, in large measure, a result of post-war reconstruction, the
implications are damning to both Keynesians and austerians/conservatives. The
left-wing but anti-Keynesian economist Harry Shutt has argued that the much vaunted three decade long, post-World
War Two boom, was due as much to pent up demand after the Great Depression and total
war, as it was to wise economic policies.

Revolutionary Road

Seen in
historical perspective, the 1950s and 1960s were the only time that capitalism worked for everyone. Growth was high,
living standards rose and full employment was a reality. Unemployment in Britain,
between 1950 and 1973, stood at an average 1.6%.

The disquieting
insight is this – that the good times were dependent on the bad times that
preceded them. The growth and economic contentment of the 1950s and ‘60s were a
direct result of both the economic devastation of the Great Depression and the
physical, near-apocalyptic destruction, of World War Two

In other
words, capitalism is a system that relies on periodic bouts of mass destruction
to prosper. If the prior destruction doesn’t happen, capitalism eventually
stagnates.

Hence
Thatcherism, which regards itself as the apogee of economic dynamism, turned
out to be such a busted flush economically.

As Shutt
has pointed out, government policies in Europe since the Second World War have been
about preventing mass destruction from happening again – either economically
through the business cycle, or physically, through war. Private businesses have
been propped up and bailed-out, stock markets manipulated and consumers
artificially created through the spreading of mass debt.

Bluntly put,
because nobody, for obvious reasons, wants the initial orgy of destruction to
happen, we can’t have the benefits of ensuing healthy economic growth and
abundant jobs. So we have had fake, as opposed to organic, growth. And now the
mask has slipped.

Thus we are
locked into a cycle of diminishing returns, no matter what economic strategy, under capitalism, is pursued.

Don’t
mistake this analysis as some kind of right-wing mea culpa. It matters a lot
that the austerians are stopped in inflicting any more unnecessary suffering on
people who had no part in causing the economic crisis. It matters a lot that
the work capability scandal in Britain
is exposed and stopped. It matters a lot that the sadistic economy-destroying,
life-shredding experiment in Greece,
Spain and Portugal, is
ended.

But the
obverse argument of many opponents of austerity (let’s call them Left Keynesians
for short) that increased government spending will lead, in time, to the sunlit
economic uplands, needs to be seen through. Because, frankly, it won’t. You can
reverse austerity, you can re-balance the economy in favour of manufacturing,
you can, theoretically, have a new ‘contract with labour’, as Stewart Lansley wants. And you won’t restore
growth to anything like the levels of the mid-twentieth century.

I’ve seen the future
and it doesn’t work

A week or
so ago the Guardian ran an interesting article by the chief economist for HSBC.
Once you have stopped laughing after reading someone working for HSBC telling
you to “live within your means,” the article is worth pursuing. The author
argues that neither Keynesianism nor austerity work as economic salvations and
we had better get used to a low growth world.

The
conclusion though, coming from someone who wants to preserve the current
economic order, is necessarily weird. “Living within our means is hardly easy
but the alternative is worse: false hope leads ultimately to financial crisis,
political upheaval and social turmoil”.

Conscious
de-growth is one thing, but capitalism and low growth is a poisonous cocktail.

The
revelation that the conviction that high government debt kills off economic
growth was actually based on a spreadsheet error, has convinced many that the Keynesian moment has come again.
Actually, the post-capitalist moment has come, though few seem to have noticed.

For if
capitalism no longer delivers the goods, and doesn’t do so on a long-term
basis, the game is most definitely on again.

Wednesday, 17 April 2013

This is a longer version of the Bad Pharma
article I was posted last year. Red Pepper were going to use this piece but
didn’t in the end. So here it is.

“It’s
easier to imagine the end of the world than the end of capitalism,” everyone’s
favourite Marxist film critic, Slavoj Žižek, once remarked. Perhaps a
sudden fleeing of the imaginative capacity explains the strangely brain-dead
reaction of the science writer Ben Goldacre to the idea that the pharmaceutical
industry should, for the good of humanity, not be conducted on a capitalist
basis.

The question, posed by the economist Harry Shutt, was not
complicated. Given that the pharmaceutical industry appears totally unsuited to
being run on a profit-maximising basis in shareholder-owned companies, Shutt
asked Goldacre in The Observer,
wouldn’t its functions be better carried out by non-profit or publicly-owed
enterprises?

Goldacre is clearly a very intelligent person, whose Guardian newspaper Bad Sciencecolumns are oases of un-credulity
refuting the claims of corporate science. His book Bad Pharma says that drug companies deliberately put dangerous or
useless drugs on the market. He’s no fool and no shill so why this did obvious
question precipitate such confusion?

Niall Ferguson has invaded my head

First, Goldacre said he was a realist, clearly implying that
he’d like a different way of running the industry but that wasn’t possible. But
by the next sentence, he revealed that he didn’t want a “central command state
economy” (Help! Niall Ferguson has invaded my head), a very jaded straw man and
definitely not what Shutt was advocating. This was followed, most bizarrely, by
the assertion that people in the drugs industry perpetuate acts of great evil,
not because they are innately evil, but because they work in a badly designed
system. This is precisely what Shutt
was saying – it’s a badly designed system, its acts are not the “fault” of the
individuals working in it, so change the system. As an answer, that lacks
something. It’s like saying 2+3 isn’t 5, it’s 5.

Finally, Goldacre says what he thinks should happen – a
“competent regulatory framework”. Are you still awake? Don’t worry, the boogie
man won’t get you because the good regulation fairy will stop him. Spoiler
alert. She won’t.

Imagine, as an experiment, the reaction if state pharmaceutical agencies were
guilty of the foisting dangerous or dysfunctional drugs on the market. There
would be immediate and deafening calls for privatisation. You get an insight
into the balance of power, intellectual and otherwise, by the fact that critics
of the misdemeanours of corporate drug companies call merely for better
regulation.

Let’s set aside for one moment the integral problem that
western “democratic” political systems, and frequently the politicians in them,
have been bought by corporations so that regulation is not remotely competent
or effective.

Regulation/Smegulation

For the sake of argument, imagine an ideal world where the
state sits benevolently above the fray and government regulation can do its job
unimpeded. What would regulation actually do?

Bear in mind the recent claim by two French medical
specialists, Professor Phillipe Even and Bernard Debré, that over half of the
medicines prescribed in France
are either useless or dangerous. 20,000 deaths a year and 100,000 hospital
admissions are linked to hazardous medication, they claim. Goldacre’s book, Bad Pharma, is specifically about the dangerous
medicines that shouldn’t be out there, but are. “… for several of the most
important and enduring trials in medicine, we have no idea what the best
treatment is, because it’s not in anyone’s financial interest to conduct any
trials at all”, he writes. And that doesn’t take into the account the drugs
that, while not harmful, do not serve any medical purpose. “If you can get on
to the market by making a me-too copycat drug that represents little or no
therapeutic advance and is even less effective than the drugs that it copies,
then you will,” says Goldacre.

So competent and effective regulation will, if it does
anything, radically reduce the number of pharmaceuticals that are allowed to go
on the market. Thereby massively hitting drug company profits and, in turn, the
number of people they employ; numbers which are dropping anyway.

Thus, you are soon face to face with a fundamental conflict
of our capitalist system. An unavoidable collision between the impulse most
decent people share for reducing the anti-social effects of capitalism, against
the need for capitalism to prosper so that everyone can have good jobs and
incomes. We are, whether we like it or not, materially dependent on the
system’s success. But a successful
system causes outcomes, such as global warming and prescribing dangerous
medicines, that are inherently destructive.

Planned Regulatory Obsolescence

If regulation of the pharmaceutical industry were actually
competent, as Goldacre wants it to be, it would prevent capitalism from working.
Actually it’s not working well, once high performing pharma stocks have fallen
below those of Coca-Cola and Unilever and drug companies are shunning research,
but effective regulation would be
another drag on profits. A UN report in 2009 found that a third of the profits
of the world’s biggest 3,000 companies would be wiped out if firms were forced
to pay for the use, loss and damage to the environment they cause. In other
words, truly effective environmental regulation would render capitalism impossible.

So regulation is, quite deliberately, not effective. It
allows, as research has found, just enough reform to buy off critics without
seriously impeding corporate priorities. In the end, Goldacre’s vision of a
“competent regulatory framework” is far more utopian than changing the system
so that profit maximization is no longer the modus operandi of pharmaceutical
companies.

An Alternative to
regulation

Is there an
alternative to the futility of regulation that avoids the pathologies of a
Soviet-style command economy? Actually there is:a weapon to bend bad pharma to the public
interest that entails no mass expropriations and preserves a market economy.

“A man who
causes harm in the course of his work can be sued for the full cost of that
harm to the point of personal ruin,” writes Dan Hind in his book, The Return of the Public.“A man who owns shares in a company that
causes the same harm risks only his original investment.” This is the privilege
of limited liability, granted by the state, on the grounds that by limiting risk
to corporate investors, innovation, in the public interest, is encouraged. But
recent experience of the finance industry, as well as pharmaceutical companies,
demonstrates that limited liability, far from promoting the public interest, inculcates
public harm.

Hind argues
that limited liability be reserved for employee-owned and managed companies.
Harry Shutt, who originally voiced the incompatibility of profit-maximising
pharmaceutical companies with the public good, believes that limited liability
should only be granted to companies that represent the community on their boards
and serve a defined public purpose.

Removing
the automatic conferring of limited liability would restore the non-profit
impulse that was once a significant part of the pharmaceutical industry. Before
it was floated on the stock exchange in 1986, the Wellcome Foundation,
wholly-owned by a charity, was one of Britain’s largest pharmaceutical
companies. The Royal Marsden Hospital
in London –
part of the NHS - is, still today, a major source of research into drugs
combating cancer, financed by a combination of state and charitable
contributions.

Without the
cover of limited liability, shareholders would, as Shutt has said, “rapidly
become an endangered species”. Profit maximising for external owners, the root
cause of “bad pharma”, would be transcended. Of course, if “drugs for drugs
sake” becomes a thing of the past, so will “jobs for jobs sake”. You can’t evade
the material dependence of virtual everybody on capitalism’s smooth
functioning, nor the implications that would result if we collectively decide
that its smooth functioning has too many damaging side-effects.

Enterprises
without external shareholders, could becomes places where the concerns of citizens
and workers are heard. If the effects of corporations, such as pharmaceutical
corporations, have enormous social effects, then they should serve,
institutionally as far as it is possible, all of society. And that doesn’t mean
the patina of regulation.

Monday, 15 April 2013

I was going
to compile a collection of Margaret Thatcher myths which have sprung up like
mushrooms after a shower in the past week. But Red Pepper got there first.It’s a good article but some
points need elaboration or contestation.

The most
egregious Margaret Thatcher myth is that she liberated the consumer. Just ask
private renters, whose ranks are swelling daily, if they feel cherished (or
even acknowledged) as consumers and brace yourself for an expletive-laden
reply. The much-vaunted privatisation programme didn’t liberate the consumer.
It created cartels or monopolies and captive markets, exploited by victorious
corporations. There was a timely article in the Guardian newspaper on Saturday
about how the six big energy suppliers in the UK have doubled their profit margins, on the back of bloated consumer prices. Thatcher privatised gas and electricity and their cost to the
consumer has more than doubled in the past five years.

Rail
privatisation – actually enacted by her successor John Major, though
Thatcherite through and through – has resulted in ballooning taxpayer subsidies
and the highest ticket prices in the world. Water bills in England and Wales are to increase by 5.7% this year. In Scotland, which
retained state ownership after Thatcher privatised water in the rest of the UK in 1989,
there will be no increase.

Another
trademark Thatcher policy – bus deregulation – led to competition for a short
time, swiftly followed by a small number of companies – in many towns, just two
– becoming dominant and hiking up fares. The technical term is oligopoly.

There are
five large bus companies, four big banks (too big to fail but getting bigger
anyway), four big supermarkets, four big accountancy firms, and six big energy
companies. There’s a pattern here. Competition in capitalist economies
inexorably leads to takeovers and concentration, thus negating the original
competition. It’s illuminating that the answer of the Right to the failures of
privatisation and finance is more competition. Smaller banks, for example,
giving the consumer more choice. To start the process again in other words.
Unfortunately the end point will be the same.

It’s worth
noting in passing the argument of David Schweickart in After Capitalism that worker-controlled firms would preserve
genuine competition because they would be less inclined to grow and absorb the
competition. Less competition means less of its opposite, monopoly.

Tell Sid he needn’t
have bothered

The
Thatcherite dream of a share-owning democracy – encapsulated in the ‘Tell Sid’
advertising campaign – is now
so contradicted by reality that it is not even espoused by the Right. Turn up
to a shareholder meeting and get outvoted, by a factor of 10,000-1, by a hedge
fund based in Dubai.
Although it is ironic that the value of shares, for the ordinary punters that
do own them, has been maintained by huge state subsidy – otherwise known as Quantitative Easing.

But on one
point the Red Pepper article is wrong. The author – Alex Nunns – argues that Margaret
Thatcher didn’t make people richer. The rich got richer and the poorer got
poorer. But spiralling inequality and rising overall wealth are not mutually
exclusive. Both happened in the 1980s. Some people, not just the already
wealthy, did get richer and progress. Real wages rose.

Margaret
Thatcher was immensely and deliberatively destructive. It wasn’t just the
mines. Between 1980 and 1983, capacity in British industry dropped by a
quarter. There were deep recessions and massive spikes in unemployment twice
under her premiership. But there was also something to put in the place of that
which was being destroyed. Privatisation, finance and a property boom. “What is
the explanation of this curious combination of the permanent unemployment of
11% of the population with a general sense of comparative prosperity on the
part of the bulk of the population?” asked the Fabian, Beatrice Webb, in 1925.
There was something of that “curious combination” about the 1980s, and that
goes a long way to explaining why she won three elections, albeit on a little
more than 40% of the vote.

Enemies without
benefits

But now, it
seems to me, the current Thatcherites in power in the UK are entirely
negative. There are unmistakable Thatcher re-treads – the ‘aspiration’ rhetoric,
supply-side, tax-cutting and red-tape shredding, solutions as the panacea for
economic stagnation, and a ‘Help to Buy’ scheme for council house tenants where
once there was the flagship, ‘Right to Buy’ scheme.

Thatcher’s
acolytes in government are, in some ways, more punitive than she ever was. The
sanction regime for unemployment benefit claimants is more ruthless than
anything seen in the 1980s. There are food banks all over the country now. I don’t recall them in 1988.

In truth,
Margaret Thatcher’s vision of popular capitalism has died.

What we
have in its place are necrophile politics and economics. Social attitudes – in
terms of sex, sexuality and culture generally - have moved on in the last
thirty years, but politics and economics are stuck as if in a time-warp. Even
Franklin Roosevelt reaction to the 1930s Great Depression – funding huge
cultural and conservation schemes – seem somehow more modern, and alive, than
the current forlorn hope that the ill winds will eventually blow themselves out
if we all work harder.

“Whilst
this once formidable Tory trailblazer is dead, her ideas are more resurgent
than ever,” wrote Lynne Segal in another Red Pepper article. Despite flurries
of resistance, she went on, “the left has yet to strike any real chord with the
broader public.”

That is true, sadly. We have Thatcherism by default because
there is no agreement about what to put in place of its rampant failure.

Thursday, 4 April 2013

In 1932,
the philosopher Bertrand Russell argued that the priorities of modern
industrial society needed a thorough reappraisal.

“I think
that there is far too much work done in the world, that immense harm is caused
by the belief that work is virtuous,” he wrote in the essay, In Praise of Idleness. “The road
to happiness and prosperity lies in an organised diminution of work.”

This is
Bertrand Russell being interviewed:

Now, 81
years later, Russell’s words appear as scandalous as when they were first
uttered. Perhaps even more so.

To question
work now, its moral necessity and the virtue-inspiring discipline it
inculcates, is to place yourself beyond the pale of sensible discussion. The
one activity the ruling Conservative party in Britain is determined to eradicate,
with seemingly widespread public support it should be said, is the possibility
of doing nothing. Of not working. Unless, of course, you are very wealthy.

In pursuit of idleness

After the
courts ruled the government’s workfare programme (temporarily) unlawful in
February, government minister Iain Duncan Smith, responded that the days of
doing nothing for benefit were “over”.

If doing
nothing is a now a capital offence, that doesn’t let those in paid employment
off the hook. "The only way we can pull out of this [the economic crisis] is by
everybody working harder,” opined foreign secretary William Hague last May.

Work is
such an unimpeachably good thing, it retains its allure even when making it
mandatory destroys paid employment. There is ample evidence that the UK government’s
work programme, which compels young people to work for corporations for free at
public expense, has enabled participating companies, such as Asda and
Superdrug, to withdraw paid over-time for their regular workforce, or not hire seasonal staff. But the work
programme has retained absolute government backing and public support.

Never mind
that Asda and Superdrug get something for nothing, courtesy of the taxpayer.
Never mind that their paid or potential employees lose out. As long as the
unemployed work.

The Old Left and the
work obligation

It has to
be said that this veneration of work contains a slither of old Left thinking.
The old Left, in an attitude stretching back to the nineteenth century, was
very insistent that everyone should be obliged to work. No-one, said the old
Left, in a taunt aimed at top-hatted, cane wielding capitalists, should live in
luxury on the labour of others. But this expectation of universal labour was
predicated on first abolishing exploitation. Now there is an expectation of
universal work, regardless of the existence of exploitation. In fact, the
expectation of work has become more emphatic as exploitation has intensified
(this might be related to the fact that exploitation has virtually expired as a concept).

“At all levels
there is a denial of exploitation, oppression, imbalance of any kind,” says
Eliane Glaser in her book, Get Real.

In America in the
1890s, Glazer points out, the poorest in society worked longer hours than the
richest. By the 1990s the richest 10% were working longer hours than the
poorest.

Work has
now achieved the status, described by Mark Fisher in his book, Capitalist Realism, of
“post-ideological”. Like recycling, its benefits are assumed unthinkingly. But
this is, Fisher says, “precisely where ideology does its work”.

The virtue
of work is an assumption even of a significant strand of anti-capitalist
thinking – the school of “economic democracy”, or workers’ control.

“Without
the pride and self-discipline that good work instills, the human spirit
shrivels,” says David Schweickart in After Capitalism.

The fact
that the virtue of work is so fervently believed in by utterly diverse elements
of the political spectrum perhaps indicates a widespread desire not contemplate
something, to blot out an uncomfortable thought.

What is work for?

What that
taboo is, I would suggest, is the ultimate purpose of work, as opposed to the
qualities it inculcates in the worker. This is the subject of Russell’s essay;
the disconnect between the ascetic belief in the virtue of work and what he terms
“the social purpose of production”.

Considering
post-revolutionary Soviet Russia, Russell remarked: “industry, sobriety,
willingness to work for long hours for distant advantages, all these reappear”.

What will
happen in Russia,
he asked, “when the point has been reached where everybody could be comfortable
without working long hours?”

This is a
question that we in contemporary advanced capitalist countries really need to
ask of our own societies. Because we have reached a condition of
“post-scarcity” – a state of affairs that could not be ascribed to Bertrand
Russell’s 1930s’ England.
“Post-scarcity” was a term coined by the social ecologist Murray Bookchin to
describe the US
of the late 1960s. It meant that society had advanced so far technologically
that it was quite feasible to produce the goods that were needed with a
fraction of the labour that used to be required in the heyday of heavy industry in the late
nineteenth and early twentieth centuries. Productivity has increased exponentially
since the sixties (though the rate of growth has been slower in the neoliberal
era than its social democratic predecessor). General Motors is now making
almost double the amount of vehicles it was in 1955 with a third of the workforce.
The archetypal postmodern corporation, Apple, employs only 60,000 people globally.

At a time
in history when, as Dan Hind says, “the machinery of material production no
longer needs more than a handful of us,” it is naively stupid to expect that
merely exhalting work will shift this fundamental historical situation. Making paid
employment more crucial to survival than it already is – 500,000 people in the UK are
‘employed’ because they work 6 hours a week – will not create the sustainable
jobs that people, or a capitalism that craves effective demand, need.

There is
another reason why idolising work is fundamentally out of time. Compared to
Russell’s day, there are urgent and mounting environmental problems. To take
just one example, arctic sea ice is melting more rapidly than virtually anymore
anticipated. More work – “altering,” in Russell’s phrase, “the position of
matter at or near the earth’s surface” – is not part of the solution, it’s a
major part of the problem. Ecologically, we, as a society, need less work to be
done. We need to de-grow.

All this
amounts to asking an elemental question, “one that Marx and Keynes asked
repeatedly,” says Glaser, “but which seems to have mislaid amongst the papers
on our desks – what is the point of work?"

About Me

Capitalism is not beautiful, said John Maynard Keynes. It is not intelligent, it is not virtuous and it not just. “But when we wonder what to put in its place, we are extremely perplexed.”
This blog is about the ideologies that mask the ugliness and injustice beneath the surface. And how our perplexity might be diminished.
You can contact me at idealogically@gmail.com